tv Newsmakers CSPAN August 12, 2012 6:00pm-6:30pm EDT
disaster relief for livestock producers expired in the 2008 farm bill. i would like to get an idea of what is being done to address this. >> first and foremost, we are trying to use as many tools as are available to the usda to provide help and assistance until congress gets back to work. hopefully they will pass a farm bill and we will include in that comprehensive disaster assistance for livestock operators and specialty crop producers.
the access to hay and grazing opportunities are important. we have opened up lands and made acres available. we have created an opportunity for for hay to be sold. that is one thing we have done, specifically. we are looking at other options and other opportunities and over the course of the next few weeks, we will make some additional announcements. the best way we can help these livestock producers is by passage of a farm bill which includes comprehensive disaster assistance. >> following those efforts the obama administration is making and the effort to pass reform legislation, the house bill that
passed last week was republican -- $383 million. it $30 million in aid was announced. do you feel right now, you are doing enough for farmers and ranchers or you cannot do as much as you would like because of the situation in congress and the lack of a farm bill? >> i think it is a combination. we are using all of the tools available to provide assistance. there are limited. that is why it is important for there to be a farm bill and why it is important and to revive or resurrect the disaster assistance programs of 2008. they worked well. they worked well for livestock producers. the livestock in them in the program provided cash assistance when they needed it. it worked well because it got a relief to livestock producers who were impacted by drought or
floods or whatever, very quickly. what we hope is the work gets done in september. the bill gets passed in the house. differences get worked out between the house and the senate and the president gets to sign legislation before september 30. the risks become greater after september 30. the whole discussion gets embroiled in conversations of sequester and tax policy, which makes a process which ought to be simple far more complex. >> some of this funding you have gotten, the $30 million, is being reprogrammed from other areas. can we find more funds within the usda? $30 million is only a couple of hours of the food stamp program. >> part of the problem is we are now in august and our fiscal year will end at the end of september. our capacity to transfer program money is very limited because most of the program money has
been already spoken for or has been allocated or appropriated. or use throughout the year. it is difficult to transfer money. in the past, we had some capacity to use commodity credit corp resources. congress provided appropriations -- we could not utilize those resources as has been done in the past for disaster assistance. we are very limited in terms of what we can do and we have to be as creative as possible in allocating these resources. the money will go to help purchase of forage, help move water, help reclaim some of the land that has been negatively impacted by the drought. it is obviously a small amount of money compared to the challenge that we face, but is an indication of an administration that is focused
on doing everything we can. it is not simply limited to those efforts. it also involves emergency loans, lowering the interest rate -- the credit union administration is opening up opportunities. credit will help folks who are having cash flow issues get through a very tough time. >> i wonder if you could address the issue of ethanol. 40% of the corn is used to produce ethanol. a number of the trade groups -- the united nations has an article in the financial times saying that the u.s. should consider waiving those renewable fuel standards while the drought is going on.
>> we have to talk about biofuels in the economy. it is a job creator. it is obviously increasing opportunity for farmers and producers because they benefit from the productions of corn and also from the processing of it. it is also something that is reducing our reliance on foreign oil. we are importing less than 45% of oil from foreign countries. three years ago, it was 62%. it is helping the consumer at the pump. there are benefits. you have to ask yourself not only what are the supplies going to be -- we are seeing estimates of reducing our yield. what is the demand going to be? is the market already responding
to signals as a result of drought? the market is responding. we are projecting livestock use of corn to be reduced by three-quarters of a billion bushels. we are suggesting exports may be 600 million bushels less than we expected. we have seen facilities shut down. we estimate 500 million bushels and corn lesson ethanol production this year than just two months ago. the market is already adjusting. secondly, there is flexibility built into the renewable fuel standards. the companies have the capacity to use these creditsgainst any credibility under then renewable fuel standard. the market is already responding and there are significant
benefits which have to be considered in making any adjustments or changes in the rfs. it is a market oriented system. we have to allow the market to continue to work. as it relates to the world situation, you have to look at the totality of agricultural production. you are seeing other countries who could have corn yields at record levels. you are seeing wheat production continuing to be strong even if supplies might be tighter. this is certainly not where we were in 2008.
i think it is important for us to make these decisions on facts and not rush to judgment in terms of fairly significant decisions that could be made that will alter not just the short-term, but could negatively impact the biofuel industry in the long term. >> white house spokesman jay carney said today that a waiver of the ethanol mandate could be on the table. do you know discussions as far as whether or not a waiver of the mandate may be something that is being considered? >> we are speaking on friday afternoon taping "washington journal." >> the epa makes this decision and they have to go through a process. they will get input from a variety of different sources, including usda and the department of energy. it is also a high threshold that legally has to be met. i think we need to take a step back and make sure that we have a good understanding of precisely what yields will be. what we have today and what we have had over the course of the last several weeks are estimates and projections of what crops could potentially be. those estimates may be very
accurate. we will not really know for sure what the harvest is and tell the harvest takes place. the market is adjusting. we know that there is flexibility in the existing system. we do know that we do not want to basically damage an industry that is providing job growth, and income opportunities, reducing our reliance on foreign oil, and is giving folks at the pump a break. all that is very important. >> secretary vilsack is joining us from omaha, nebraska. what are you seeing on the ground? >> it is no surprise that depending upon where you are and what field you are standing in, you will see corn that has been very damaged. corn that has been slightly damaged. corn that looks ok. you can be in the same county and one form can be doing well
and the other is doing poorly. that is why it is important to mention that we do not know for sure what the yields will be. we just have estimates. interestingly enough, the estimate we have right now is about 10.8 billion bushels of corn, which would be the eighth largest corn crop in history. even as we deal with very serious drought, you have to ask yourself how it is possible we have yields like that come out. part of it has to do with see technology. part of it has to do with when it rains. when you stand in a farm, you will see a lot of different things. what concerns me most is making sure that as we make decisions and as we establish policy and as we respond to this historic drought, that we do it based on the facts. we do it in a reasoned way. we do with understanding the implications of decisions that
we make. we begin to look for the opportunity side of this. we need to continue to invest and focus on the agricultural productivity because even though we are faced with historic drought, we are talking about a largest in the country's history. this speaks to the resilience of american agriculture. i think is very important that we make these decisions in a reasonable way and that is what i would caution everyone to do. certainly challenging the usda not to be looking at the short-term, but the long term, too. the industry will have to make decisions. the one thing that really concerns me is what if congress fails to act in a timely way to get the farm bill done?
how will that impact those decisions that the livestock producers make? the decision to liquidate affects that situation forever. >> ron nixon. >> a lot of people are wondering what this means for them at home. >> it is important to talk about this because i think there are some conceptions and misconceptions about all of this. when people read united nations reports that food prices are going up, they fail to recognize that the report is dealing with commodity prices. it is not a direct correlation between an increase in commodity prices and corresponding equivalent increase in food prices. there are a lot of people who benefit from agricultural production and processing.
farmers only get 14 cents on average of every food dollar. therefore, even though commodity prices paid to the farmers may be going up, it does not necessarily translate into significantly higher food costs. the reason being is the farmers only get 14% of every dollar. the other 86 cents goes to people who process, package, transport, refrigerator, and shelve. energy costs are also responsible for food increases. we anticipate food inflation for 2013 to be somewhere between 3% and 4%. this takes into consideration current conditions. 3% to 4% is not that much off of what we normally see in terms of food inflation.
in 2008, which was a year that was high food inflation, we saw 5.5% increase. this year, somewhere between 2.5% and 3.5%. all of those are in the historic range of food inflation. if the drought has an impact, there will be two impacts. there is a possibility we would have an oversupply. that could result in lower prices for a short time at the grocery store, primarily for meat and poultry. then, as we get later into the year and the first part of next year, we begin to see a tightening of supplies. we could see increases, but we are expecting a 0.5% to 1% increase in food prices.
>> we have 10 minutes left with the secretary. >> mr. secretary, in the next week, you and president obama will be in a place you know well. iowa. you mentioned earlier that farmers and ranchers will be making important decisions. americans will be making a lot of important decisions in the elections. i'm wondering how you see this drought potential playing from a political standpoint given that the ground is kind of purple. >> folks in rural areas understand the last few years ave been a good solid years. we have seen record farm income. record investment. record expansion of a bio-based economy. they appreciate the fact that
there is in place a framework to prosperity. the drought affects that momentum, but a greater concern to folks in the long term is the fact of what the farm policy will be. that is why when i travel around the country, i your people more concerned about what the farm bill will contain. i will tell you that as i talk to folks, obviously they want to make sure the president is aware of the circumstances and consequences of the drought. i think they have been impressed with the fact that he is on top of this and has taken a personal interest in this. he has directed me to do everything possible that the usda can do and he has instructed me to convene that council and get the council members involved. the department of transportation has a role of making sure that
they will get truck weights so that we can reduce the potential for getting crops to market. they are meaningful to the people who are struggling now. the president is calling on congress to enact a farm bill. that is an important signal we are sending to rural america. at the end of the day, folks will appreciate what the president is about. you mentioned there is a clear contrast on issues like wind energy industry. as they understand the differences between these two candidates, the president will do fine. >> do you have any estimate of what crop insurance will be?
we had a record last year for about $11 billion. any idea what we are looking at? >> i imagine it will be in excess of what happened last year. it is important for folks to recognize that the crop insurance companies are very confident that they'll be paid in a timely manner. i am not concerned about the capacity of the industry to meet the demands of those. it is important to note that in 1988, the last time we had a drought, 25% of the producers have crop insurance. this time, 85% do. otherwise we would be faced with serious consequences, much more so beyond what is happening now. >> when you look at the usda
numbers, you see not just a u.s. picture, but a global picture. brazil is growing more soybeans in the u.s. you see big cuts in the forecast. there are many places that are having their own challenges. what does this drought say about the global economy? >> part of what it says is the role of continuing to coordinate the needs of the population. we are having increased population by 70%. that puts a premium on coordination and collaboration.
we need to be more productive and agriculture. it is important in a situation like this that we do not panic. we do not have panic buying or selling. we cannot have countries that create trade barriers to make it difficult for the market to basically do what markets do. greater transparency. greater focus on productivity. greater collaboration. we need to make sure that we have a good sense of what the goal of food supply is. >> we have had food price spikes in 2008 and 2010. could we see things rise and fall again? >> i do not know. i think it is pretty clear that
we want to make sure that we continue to have a focus on food production. i have spent a lot of time talking to my counterparts in other countries about the necessity of embracing science and new technologies and trying to streamline regulatory process so we can get the technology is in place. the american agricultural story is of extraordinary productivity. we have seen a 300% increase in corn production. 200% increase in the soybeans. that is important. we will have to replicate that across the world. i would rather focus not so much on the political instability that this could cause, but the opportunity it creates for better collaboration and coordination and a better world response to the needs of research, the sharing of research, and the focus on making sure we have a transparent market and information about supplies.
that will allow us to make more informed decisions and allow the markets to do with they do. i think it is instructive. in this particular drought, the market is already adjusting. livestock feed projection is down. ethanol production is down. exports are likely down. that is the mket responding. we want to make sure that we do not take steps that would necessarily interfere with those market signals. >> time for a couple of more questions. >> you have talked about this possibly being the eighth largest corn crop production in history. what are some things that you wish to take away from this? we have heard about the devastating drought, but that is a pretty positive thing that we will have the eighth largest corn crop. >> it is important for folks to appreciate the impact this has
on livestock. we have risk-management tools in place for crop producers, but we do not have them for livestock producers. that is why it is important to the disaster programs. we need a safety net, even though we have experienced record exports and farm income. we expect a bumper crop in which some folks were concerned that corn prices would be below the cost of production. i think we have to make sure that we are conscious of the fact that the challenges in the global food system, in a system where there are multiple uses and opportunities for the use of agricultural products, that we have to think about how to adapt to extreme weather patterns in conditions so that we are putting ourselves in the best possible conditions to be productive. even with this drought as severe
as it is, the fact we are even talking about 10 billion bushels of corn at 123 bar shows per acre, which is the expectation today, compare that to 1988 -- 82 bushels to baker. there has been a technique and part of that has to do with the fact we have better technology. it seems to me there maybe double cropping opportunities that would provide additional cushion against a tough year. particularly as it relates to foliage. i think that double cropping opportunities are there and we should be considering how we structure our systems and insurance programs, not to discourage or disincentivize.
we want to make sure that the farmer is getting small amounts and energy causes have more to do with food increases. there is a lot to hear and i think it is a lesson to be learned from these farmers. what strikes me is how resilient they are. they have been through this before. they know that they will be faced with difficult times. they just need to know what the rules are they need certainty. they're very tough. we are fortunate to have them in this country.
>> tom vilsack joining us from omaha, nebraska. thank you. we will turn to ron nixon and alan bjerga.takeaways? alan bjerga? >> i saw some echoes and some possibilities there. when you have a drought that focuses natural attention on agriculture, that brings up all sorts of interesting conversations about ethanol, livestock, what we should be growing food for, and what we should be even producing. there are some hints there that
are intriguing and i am looking forward to hearing the secretary speak in the future. >> the biggest take away for me was the market adjustment that the secretary talked about with ethanol production and exports going down. you will not have this stress that we have heard analysts say that we would have with the corn crop being reduced. there is a divide in the agriculture community with livestock producers and those who produce ethanol. that is something that has been happening for a while but the drought has brought out more division. >> the secretary talked about looking at the long-term versus short-term. what does he mean? >> listening to the secretary having covered him since he took office in 2009, i think there's a little concern here that when you have an intense situation
like this, a lot of the longer term efforts to do things like build biofuels which is important to the secretary may end up being sidetracked by people concerned that the corn supply is tight and we need more flexibility there. it is a difficult argument for him to fend off. and you know there is some pressure being felt. >> his wife is running for congress. >> against steve king. there will be politicing going on in the next couple of weeks. >> a lot of the programs expire on september 30 if congress doesn't do anything and critical for planning, for farmers. the secretary has been pushing that a lot.